India cites data to push farm subsidy cuts
India has struck back at the US which has been defending its farm subsidies with its claim that agriculture tariffs are more harmful for poor nations.
By Amiti Sen, TNN |
NEW DELHI: India has struck back at the US which has been defending its farm subsidies with its claim that agriculture tariffs are more harmful for poor nations.
In a letter to the US trade representative Susan Schwab, India has come up with its own numbers revealing that reduction in subsidies would lead to greater exports, lower imports and more employment in developing countries than a proportional reduction in tariffs.
Not just that, India has also cited research work done by leading economists and institutes across the world to buttress its claims. The letter sent to Ms Schwab has also been sent to EU trade commissioner Peter Mandelson who is a key player in the on-going agriculture negotiations at the World Trade Organisation (WTO).
The on-going Doha round of WTO negotiations were suspended as the US, which provides $19bn of trade-distorting subsidy (TDS) to its farmers annually, refused to undertake reduction commitments. Instead, it wanted the flexibility of increasing it to $23bn in future.
This was totally unacceptable to the G-20 group of developing countries which have been demanding that the US should reduce its TDS to $12bn. In its letter, India cited its empirical analysis which shows that the reduction of subsidies have a much larger positive impact on the welfare of developing countries in terms of increase in production, exports and employment and a reduction of imports.
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The analysis shows that less developed net food importing countries also stand to benefit more from the reduction of subsidies than the cut in tariffs. India’s research is in contrast to the economic review brought out by the US Department of Agriculture (USDA) which claimed that the economic gains from tariff cuts in agriculture would far outweigh the benefits of subsidy cuts. India’s assertion is supported by estimates by Canada’s Department of Agriculture which show that developing nations would benefit by about $4bn annually, if subsidies in the developed world were even halved. If such subsidies are abolished, this benefit would increase to around $8bn.
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